- Goldman Faces Loss of $2 Billion for Quarter
- Fed Signals More Action as Slump Drags On
- Schwarzenegger Calls Fiscal Emergency in California
- Bond Risk Surges to Record on Concern Slump ‘Too Hard to Fix’
- GM, Ford, Chrysler UAW Leaders Call Emergency Meeting
- Fund Investors Sue Countrywide Over Loan Modifications
- JPMorgan Chase to Cut 9,200 Washington Mutual Jobs Nationwide
- Carlyle Takes Another Hit As Telecom Firm Goes Under
- It's official: Recession since Dec. '07
- Self-Employed Are Frozen Out of Mortgages
- Liquidnet to delay IPO until 2010
- Ford Will Speed Green-Car Launches
- Toyota Cuts Bonus Payments for Managers as Sales Fall
- Pilgrim’s Pride Seeks Bankruptcy on High Grain Costs
Goldman Faces Loss of $2 Billion for Quarter
- Wall Street Journal
Goldman Sachs Group Inc., known for avoiding many of the blowups that have battered its Wall Street rivals, now is likely to report a net loss of as much as $2 billion for its quarter ended Nov. 28, according to industry insiders.
The loss, equal to about $5 a share, would be more than five times as steep as the current analyst consensus for the Wall Street firm, as it faces write-downs on everything from private equity to commercial real estate.Though analysts and investors already were bracing for Goldman's first quarterly loss since it went public in 1999, the pessimism has grown sharply. "The last two weeks have been nothing short of horrible, with asset prices coming under ever more pressure than before," said Susan Katzke, an analyst at Credit Suisse Group, who on Monday reduced her Goldman estimate to a fiscal fourth-quarter loss of $4 a share. Previously, she projected a profit of $2.47 a share. Goldman is expected to report its financials in a few weeks.....
Fed Signals More Action as Slump Drags On - Wall Street Journal
Federal Reserve Chairman Ben Bernanke laid out new steps the Fed might take to lift the economy, as the panel that monitors the U.S. business cycle said the nation has been in recession for a year -- the longest downturn in a quarter century
The National Bureau of Economic Research said Monday that America entered recession in December 2007. Mr. Bernanke flagged the likelihood of further relief for the sagging economy at a speech in Austin, Texas.
More reductions in short-term interest rates are "certainly feasible," Mr. Bernanke said. But with the Fed's benchmark rate already at 1%, more cuts would bring the rate to near zero, prompting concern that the Fed would be out of recession-fighting ammunition. Mr. Bernanke sought to emphasize other steps the Fed might take to spur the economy.....
Schwarzenegger Calls Fiscal Emergency in California - Bloomberg
California Governor Arnold Schwarzenegger, saying his state is going broke, declared a fiscal emergency and ordered the incoming class of lawmakers into a special session to fix a widening $11 billion deficit.
Schwarzenegger, a 61-year-old Republican, wants lawmakers to raise taxes and cut spending to narrow the gap that is projected to swell to $28 billion over the next 18 months. He invoked powers granted him in 2004 to declare a fiscal emergency, which gives the Legislature 45 days to plug the shortfall. If they fail to find a solution in that time, they are barred from doing any other legislative work until they do.
“Without immediate action, our state is heading for fiscal disaster,” Schwarzenegger told reporters today in Los Angeles. “I’ve had to make tough choices that I wish I didn’t have to make, and I know this is a terrible time to raise taxes, but it’s also a terrible time to make cuts to very important programs. But in an emergency like this, we have to take quick action to avoid even worse problems, even if they include decisions that we don’t like.”....
Bond Risk Surges to Record on Concern Slump ‘Too Hard to Fix’ - Bloomberg
The cost of protecting corporate bonds from default soared to a record on concern central banks are reaching the limit of what they can do to ease the severity of the global economic recession.
Credit-default swaps on the Markit iTraxx Crossover Index of 50 companies with mostly high-risk, high-yield credit ratings increased 18 basis points to 956, according to JPMorgan Chase & Co. prices at 9:36 a.m. in London. The Markit iTraxx Europe index of 125 companies with investment-grade ratings climbed 3.5 basis points to 191.5 and earlier traded at a record 198.
“The economic slump is too hard for anyone to fix right away,” said Tetsushi Nagato of Schroder Investment Management Japan Ltd., whose parent manages the equivalent of $205 billion.....
GM, Ford, Chrysler UAW Leaders Call Emergency Meeting - Bloomberg
General Motors Corp., Ford Motor Co. and Chrysler LLC union leaders will meet Dec. 3 in an emergency session in Detroit as the companies seek concessions to win $25 billion in loans with plans due to be sent to Congress tomorrow.
United Auto Workers officials will be asked to reopen a 2007 labor agreement, said one person familiar with the forum, who asked not be named because it’s private. Two delegates from each UAW local are invited, according to a copy of a letter obtained by Bloomberg News from a person planning to attend.
GM, at risk of running out of operating cash this year, wants to stop paying union workers when plants are closed and there is no other work, people familiar with the company’s plans said. Ford and Chrysler likely will ask for similar concessions to help them get government aid, two union officials said today.....
Fund Investors Sue Countrywide Over Loan Modifications - NY Times
As policy makers push banks to help struggling homeowners, some angry investors are pushing back.
On Monday, a hedge fund sued the Countrywide Financial Corporation, the giant mortgage lender, demanding that Countrywide compensate holders of some securities backed by mortgages if the lender changes the terms of the loans.
The fund, Greenwich Financial Services, said it and other investors stood to lose money if Countrywide, now part of Bank of America, modified loans under a settlement that it reached with 11 state attorneys general in October.
In recent months, some investors who own mortgage securities have begun voicing concern about how loans are modified, but few have filed suit....
JPMorgan Chase to Cut 9,200 Washington Mutual Jobs Nationwide - Bloomberg
JPMorgan Chase & Co., the largest U.S. bank by assets, will cut 9,200 Washington Mutual Inc. jobs nationwide as it acquires the Seattle-based lender, a spokesman said.
The bank will eliminate 4,000 jobs and put 5,200 employees on a transition team. Those employees will help integrate the banks and some will remain in the positions until the end of next year, JPMorgan spokesman Thomas Kelly said in an e-mail today.
JPMorgan paid $1.9 billion in September for most of WaMu, including the branches and deposits, after the thrift was taken over by the Federal Deposit Insurance Corp. New York-based JPMorgan expects to keep most of the WaMu branch employees and will shutter less than 10 percent of the combined company’s retail outlets.....
Carlyle Takes Another Hit As Telecom Firm Goes Under - Washington Post
Carlyle Group, the District-based private-equity firm, suffered a new setback yesterday when one of its investments, a Hawaiian provider of local and long-distance telephone service, sought bankruptcy protection from creditors.
Carlyle had put $425 million in Hawaiian Telcom Communications and borrowed almost $1.2 billion to buy the company from Verizon in 2005. But the telecommunications company struggled almost from the start.
Its collapse followed other reversals for Carlyle this year. In March, Carlyle wrote off a $7oo million investment in Carlyle Capital, an offshore public company that invested in mortgage-related securities. Then Carlyle announced in July that it would liquidate Carlyle-Blue Wave Partners Management, which made similar bets in mortgages.....
It's official: Recession since Dec. '07 - CNNMoney
The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .
The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.
The NBER said that the deterioration in the labor market throughout 2008 was one key reason why it decided to state that the recession began last year.....
Self-Employed Are Frozen Out of Mortgages - Wall Street Journal
The government's recent moves to backstop the mortgage market have made it easier for many people with decent credit scores to get a loan. But for many self-employed people -- even those with pristine credit -- the mortgage freeze has yet to thaw.
A reversal of the loose lending practices that led to the banking industry's current woes was certainly expected. But some economists and mortgage brokers say lending standards have become overly restrictive, which could be exacerbating the credit crunch and helping push down home prices further."Underwriting criteria have swung from foolish ease to tighter than any in modern times," says Lou Barnes, a mortgage banker in Boulder, Colo.....
Liquidnet to delay IPO until 2010 - Reuters
Trading platform Liquidnet will delay its plans to go public until 2010 due to poor market conditions amid the global financial turmoil, the U.S. company's chief executive said on Tuesday.
Liquidnet Holdings Inc had originally planned to conduct an initial public offering by the fourth quarter of this year and sell up to $500 million of its common shares.
"Back when we filed to do an IPO, Citibank was trading at $50, Goldman Sachs was at $150 or something ... a lot has changed since we filed (in July)," Seth Merrin, founder and chief executive, told Reuters in an interview......
Ford Will Speed Green-Car Launches - Wall Street Journal
The Big Three auto makers will submit recovery plans to Congress on Tuesday that emphasize cost-cutting, downsizing and renewed emphasis on higher-mileage cars in a bid to win support for a federal bailout.
Ford Motor Co. Chief Executive Alan Mulally plans to tell Congress he is accelerating his company's development of hybrid and electric vehicles and is willing to cut his salary to $1 a year if Ford uses any federal funds.General Motors Corp. is expected to focus on efforts to lighten the company's heavy debt load and consolidate or sell at least one of its eight automotive brands, most likely Saab, people familiar with the matter said. GM CEO Rick Wagoner also will take a $1 salary, those people said. Chrysler LLC is likely to emphasize its need for cash to stabilize the company and eventually join an alliance with one or more foreign auto makers, a person close to Chrysler said....
Toyota Cuts Bonus Payments for Managers as Sales Fall - Bloomberg
Toyota Motor Corp., the world's second-largest automaker, cut winter bonuses for the first time for about 8,700 managers in Japan as a global recession cripples car demand.
The company lowered bonuses by about 10 percent, according to Shinji Miyatake, a Tokyo-based spokesman for the carmaker. It's the first reduction in bonuses since 1998 when the company introduced a new pay system. Miyatake declined to say how much the company will save. The company has about 69,000 employees in Japan.
Toyota slashed its profit forecast by 56 percent last month prompting President Katsuaki Watanabe to set up an emergency committee to cut costs and review all new projects. Toyota, Nissan Motor Co. and Honda Motor Co. are all cutting temporary jobs as industrywide auto sales in Japan fell most in 34 years last month.....
Pilgrim’s Pride Seeks Bankruptcy on High Grain Costs - Bloomberg
Pilgrim’s Pride Corp., the largest U.S. chicken producer, sought bankruptcy protection along with five affiliates after rising grain costs and a poultry surplus led to four consecutive quarterly losses.
The company, a supplier to Wal-Mart Stores Inc. and Yum! Brands Inc.’s KFC restaurants, listed assets of $3.75 billion and debt of $2.72 billion today in U.S. Bankruptcy Court in Ft. Worth, Texas. It said it will seek $450 million in loans arranged by Bank of Montreal for operations during its reorganization.
The filing “was a necessary and prudent step and the best way to obtain the financing necessary to maintain regular operations and allow for a successful restructuring,” Pilgrim’s Pride Chief Executive Officer Clint Rivers said in a statement....
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